Re­move ret­ro­spec­tive ef­fect on land tax

FARM­ERS have taken ad­van­tage of the on­go­ing pub­lic con­sul­ta­tions on the Land Com­mis­sion Bill to ex­press their frus­tra­tions with the Gov­ern­ment over the ret­ro­spec­tive ap­pli­ca­tion of a new land tax.

In­tro­duced last year, the $5 land levy for ev­ery hectare an A2 farmer owns, is meant to not only pro­mote pro­duc­tion but also raise money to fund pe­ri­odic land au­dits and com­pen­sate white for­mer farm­ers. The idea be­hind the levy is that a farmer would be forced to en­hance his or her pro­duc­tion to be able to raise enough money, part of which he or she would use to pay the rental to the Gov­ern­ment. If one doesn’t farm, and re­sul­tantly can’t pay the rental, it is be­lieved, he or she would be forced to give up part of their land, which would be al­lo­cated to other able farm­ers, many of whom are on wait­ing lists across the prov­inces.

If one strives to boost farm pro­duc­tion, the coun­try would be in a good po­si­tion to achieve greater util­i­sa­tion of farms, af­ter years of com­plaints that some new farm­ers are sit­ting on their farms, only find­ing use for them as venues for week­end braai par­ties.

All fac­tors taken to­gether, the land levy can be an in­stru­ment to widen the num­ber of ben­e­fi­cia­ries of the land re­form pro­gramme, stim­u­late greater pro­duc­tion and raise money to pay the for­mer farm­ers and to fi­nance in­fras­truc­tural de­vel­op­ment in farm­ing ar­eas.

In terms of the Fi­nance Act No. 8 of 2015 an A2 farmer must pay $3 land ren­tals per hectare per year, and $2 unit tax per hectare an­nu­ally, which works out to $5 per hectare per year. A1 com­mu­nal farm­ers pay $10 land ren­tals per year, and $5 unit tax over the same pe­riod, a to­tal of $15 per year. The Min­istry of Lands and Ru­ral Re­set­tle­ment col­lects the money and for­wards it to Trea­sury be­fore the lat­ter al­lo­cates the unit tax to re­spec­tive lo­cal au­thor­i­ties. An es­ti­mated $20 mil­lion would be raised an­nu­ally.

How­ever, in con­tri­bu­tions for the Land Com­mis­sion Bill, farm­ers in Mashona­land Cen­tral, Mashona­land East, Man­i­ca­land and Masvingo are un­happy that they have to pay large sums of money with ef­fect from when they were al­lo­cated the farms. At the same time, some farm­ers feel that at $5 per hectare per year, the levy is too high for cat­tle ranch­ers on typ­i­cally larger pieces of land, up to 1 500ha.

Zim­babwe Com­mer­cial Farm­ers’ Union Masvingo pro­vin­cial chair­per­son Mr Liv­ing­stone Mabika told the joint com­mit­tee of the Se­nate The­matic Com­mit­tee on Peace and Se­cu­rity, and the Na­tional Assem­bly’s Port­fo­lio Com­mit­tee on Agri­cul­ture, Lands and Ir­ri­ga­tion De­vel­op­ment at Roy Busi­ness Cen­tre in Masvingo North that the blan­ket charge of $5 was not sus­tain­able for farm­ers in Re­gions Three, Four and Five.

“Each beast takes about three years to ma­ture, of which it grazes about 12 hectares per year, mean­ing that if you sell it at two years, you would have paid $120 land levy with­out fac­tor­ing in the other costs, which are ob­vi­ously way more than that,” said Mr Mabika.

“It is gloomy in the sense that in this prov­ince, some farm­ers have about 1 500 hectares for cat­tle ranch­ing, mean­ing that they are ex­pected to pay $7 500 in ren­tals per year. To make it worse, they back­dated the ren­tals to when we dol­larised in 2009. In essence, some farm­ers are ex­pected to have paid about $60 000 in ren­tals.”

Mashona­land Cen­tral farmer, Mrs Buppe Changara, also told the com­mit­tee that the land levy made it dif­fi­cult for the ma­jor­ity of farm­ers.

“Gov­ern­ment in­tro­duced land tax as from last year but when we were given in­voices, you find that land taxes have been im­ple­mented from the date one was given an of­fer let­ter. I was given an of­fer let­ter af­ter the death of my hus­band in 2007, which comes into thou­sands of dol­lars about $40 000. I don’t know how I am go­ing to pay that,” she said.

It is en­cour­ag­ing that the farm­ers are not re­ject­ing the in­tro­duc­tion of the levy. They know the ra­tio­nale be­hind it but can­not un­der­stand why the Gov­ern­ment gave it a ret­ro­spec­tive ef­fect. Yes, many farm­ers had been pro­duc­ing well be­fore last year’s im­ple­men­ta­tion of the pol­icy and earned money from their farm op­er­a­tions, but to demand that they pay the tax back­dated to the time when the econ­omy was dol­larised looks most un­fair.

We can only imag­ine the shock farm­ers had on see­ing huge sums on in­voices from the Min­istry of Lands and Ru­ral Re­set­tle­ment, huge sums that came with­out any warn­ing.

We are con­cerned that if the pol­icy is not re­viewed and, for ex­am­ple, Mrs Changara is forced to pay $40 000 and other farm­ers up to $60 000, the levy could pose a neg­a­tive im­pact thus ham­per on­go­ing ef­forts to nur­ture our new farm­ers and grow the agri­cul­ture in­dus­try.

How­ever, we don’t agree with Mr Mabika that $5 per hectare per year is too high for beef pro­duc­ers who nor­mally have big­ger farms. We ar­gue that at the present level, a pro­duc­tive farmer should be able to af­ford pay­ing the tax, but would find it prob­lem­atic if he has to pay it back­dated to 2009.

It would be a great de­ci­sion, one which would be also fair, if the Gov­ern­ment does away with the ret­ro­spec­tive ap­pli­ca­tion of the tax and start billing farm­ers with ef­fect from when the pol­icy was pro­mul­gated last year.